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Cotton prices continued to surge Thursday after the government slashed its outlook for the U.S. cotton crop, surprising investors who’d anticipated a bumper crop and ideal growing conditions.

Cotton futures for December jumped 1.4% to 65.61 cents a pound, the highest in a month, extending Wednesday’s gains.

The U.S. Department of Agriculture’s estimate of cotton stockpiles and production for the 2015-16 marketing year shrank in August, below both its July forecast and the expectations of analysts who were expecting them to grow considerably. The agency said its estimates were the first for the season that are based on surveys at the field level. The agency said it saw lower planted area, higher abandonment and a lower average yield than it anticipated last month before the field survey.

“I think this report is just terribly wrong,” said Chris Kramedjian, risk management consultant at INTL FCStone in Nashville.

A large swath of this year’s crop in Texas, the largest cotton grower in the U.S., got off to a late start because of record rains in May that delayed planting but reports out of Texas have pointed to ideal growing conditions since then.

“We were a bit surprised by the report as well,” said Steve Verett, executive vice president at Plains Cotton Growers in Lubbock, Texas, which represents about 60% of cotton grown in the state.

Mr. Verett said the organization had anticipated fewer acres planted but was surprised by USDA’s estimate that farmer abandonment of cotton acres would be on par with historical averages.

“If I have an argument with the numbers for our area, it’s in that abandonment figure,” he said. “I think we’re under historical abandonment. This crop has done very well, our crop was planted a little bit of late so we had to do some catch up and July allowed us to do that.”

In other markets, raw sugar for October delivery rose 0.4% to 10.58 cents a pound after Brazilian crop agency Conab reduced slightly its forecasts for sugar and ethanol production for the year. Brazil is the world’s largest sugar producer.

Arabica coffee for September jumped 2.5% to $1.3515 a pound, cocoa for December slumped 0.8% to $3,027 a ton and frozen concentrated orange juice futures for September fell 0.2% to $1.319 a pound.